C1 - Chapter 10

C1 - Chapter 10 - 10-1 Chapter 10 Long-Term Liabilities 1 ,...

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Unformatted text preview: 10-1 Chapter 10 Long-Term Liabilities 1 , Financial Accounting 1st Canadian ed. by PNCS-B 10-2 Balance Sheet Classifications Current Liabilities: Long-Term Liabilities: due within one year of the balance sheet date due beyond one year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 28 29 30 31 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 28 29 30 31 27 10-3 Long-Term Liabilities Bonds Payable Notes Payable Leases Future (Deferred) Taxes Pensions Other Postretirement Benefits 10-4 Interest for Investor Borrower Bonds $10,000 9% Bond Due 2019 Long-term borrowing arrangement Interest paid at stated rate and times Principal repaid at maturity date 1 , Investor Borrower 10-5 Bond Features Collateralized- backed by specific assets in event of default Debentures - backed only by general credit- worthiness of issuer 10-6 Bond Features Term- Entire principal due on a specific single date Serial- Principal repaid in installments over time 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 28 29 30 31 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 28 29 30 31 27 10-7 Bond Features Convertible- into common shares Callable / Redeemable - may be retired before maturity date Common Share 1 , 10-8 Bond Interest Rates Face Rate - interest is paid at the rate specified on the bond Market Rate - the interest rate the bond will yield after selling at a discount or premium P a y c h e c k f o r D a t e D e p t . . o f T r e a s u r e r J a n e D o e 8% Return 10-9 Interest Rates and Bond Prices Above face value (at a premium) At face value Below face value (at a discount) = MARKET RATE BONDS ISSUED: IF STATED RATE: > MARKET RATE < MARKET RATE 10-10 Bonds Sold at Face Value Cash 10,000 Bonds Payable 10,000 To record issuance of bonds at face value....
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This note was uploaded on 10/19/2011 for the course ACCT 2242 taught by Professor Cumming during the Spring '11 term at Dalhousie.

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C1 - Chapter 10 - 10-1 Chapter 10 Long-Term Liabilities 1 ,...

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